Video

Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.

For decades now, the political left in the US has had to content itself with the neoliberalism of Democratic leaders like Barack Obama and Bill Clinton while the right has selected its champions from hawkish, market-centric politicians in the mould of Ronald Reagan.

Like European politicians like France’s Marine Le Pen, Germany’s Frauke Petry, and Denmark’s Kristian Thulesen Dahl, Trump’s platform emphasises the well-being of his country’s people at the expense of would-be immigrants, rival nations, and free-market principles alike.

In September 2016, right-wing US radio host Rush Limbaugh said in September 2016, “Trump is not a conservative… conservatism lost in the primary […] we had [Ted] Cruz, we had [Marco] Rubio.” In October, former House Speaker John Boehner concurred, telling Vice News that “[Trump is] not a conservative; he’s barely a Republican”.

Already, president Trump has verbally intervened against pharmaceutical prices and told press (pre-election) that he intends to provide “[health] insurance for everybody”. He has attacked the tax breaks enjoyed by wealthy Americans as well as “sweatshops” and “pollution havens”. In certain ways, and particularly in terms of his non-interventionist foreign policy, Trump ran to Hillary Clinton’s left.

“Participants included North America's Building Trades Unions' president Sean McGarvey, Laborers' International Union of North America president Terry O'Sullivan, SMART sheet metal workers' union president Joseph Sellers, United Brotherhood of Carpenters president Doug McCarron and Mark McManus, president of the United Association that represents plumbers, pipefitters, welders, and others. The union meeting also included several local union officials and follows a gathering of 12 chief executives of large companies at the White House to discuss revitalising the U.S. manufacturing economy.”

While the vast majority of US labour unions supported the Democratic party in the 2016 election, there exists a growing disconnect between the Democrats’ labour wing and the party’s mainstream – a divide made apparent by the lack of partisan consensus on Trump’s decision to pull the US out of the TPP.

In fact, both senators Bernie Sanders and Sherrod Brown of Ohio praised the president’s decision while Arizona senator and 2008 Republican nominee John McCain called the move “a serious mistake”.

While Trump’s inauguration was followed by massive “Women’s March” protests in Washington and other US cities, as well as capitals across the world, the demonstrations notably lacked any economic bones of contention.

A survey of photos from the DC event shows an enormous outpouring of support for minority and women’s rights, as well as a groundswell of opposition to Trump’s past statements and general demeanour. It does not, however, show any mass concern over trade policy, workers’ rights, Middle Eastern wars, or the offshoring of manufacturing jobs.

It would appear that the US usage of the term “liberal” is converging with the European one; where the term once connoted a leftist stance stateside, it now signifies an immense concern for identity issues and a tacit acceptance of Blair/Clinton-style “Third Way” neoliberalism.

If Monday’s union summit is any indication, this is a shift that president Trump intends to exploit.

Following the meeting, Teamsters leader Jimmy Hoffa issued a statement lauding Trump’s taking “the first step toward fixing 30 years of bad trade policies that have cost working Americans millions of good-paying jobs.”

Sean McGarvey, president of North America's Building Trades Unions, was similarly bullish after the summit, stating that Trump “intends to do the work on the issues he discussed on the campaign trail;” and adding that the meeting was “by far the best” he has had in the nation’s capital.

According to Reuters, Trump carried 42% of union households compared to 51% for Clinton. Trump’s performance, however, was up from 2012 Republican contender Mitt Romney’s 35% and it appears as if the president is looking to make inroads into this voting bloc.

"The unions largely endorsed Clinton due to a tradition of supporting Democrats," says Saxo Bank head of forex strategy John J Hardy, adding that "[it was] crazy, really, but Clinton was trying to take on the anti-free trade mantle to a degree because of these voters."

Ultimately, however, Hardy says that "unions have narrow interests for their members and think that Trump’s protectionism should be celebrated because it might save jobs... but there is some cognitive dissonance at work here as well, as Trump was elected as a Republican and they haven’t historically been pro-union at all."

It could be argued that both “Third Way” neoliberalism and National Review-style conservatism take significant support from voters who would honestly prefer Sanders-style democratic socialism or Trump (or le Pen et al.)-style nationalism, were it available.

The narrow and controversial victory of Hillary Clinton over Sanders (the leaked Democratic National Committee emails showed clear, high-level favouritism towards Clinton) and Trump’s victory against both his establishment Republican primary rivals and ultimately Clinton show that there is significant street-level support for a socialist/nationalist political spectrum that ignores the ideological pieties of both US-style “liberalism” and “conservatism”.

As it happened, the conservative wing of the Republican party was defeated in 2016 while the neoliberal wing of the Democratic party was not.

Expect the Trump administration, then, to attack its opposition from both its right and its left.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer